Thursday, March 7, 2013

■ UNITED KINGDOM: fastjet takes Don Smith to court over ownership of Fly540.

fastjetIn the latest episode in the fastjet vs Don Smith soap opera, the Tanzanian LCC has now moved to take legal proceedings against Mr Smith, owner of 540 Aviation, seeking "a declaration that it has fulfilled its obligations under the Sale and Purchase Agreement" regarding Mr Smith's shares in Fly540.

The court case is set to go ahead in the High Court of Justice in England, UK, with fastjet seeking a declaration that it has fulfilled its obligations under the Sale and Purchase Agreement, which is specifically governed by English Law, made between fastjet Plc (formally Rubicon Diversified Investments Plc) with Smith on the 10 June 2012, including that it has paid Mr Smith in full for his shares in Fly540. 

fastjet will also seek an order that Smith immediately hand over all the necessary documents to complete transfer of control of Fly540 Kenya to fastjet.

David Lenigas, fastjet's Chairman stated:
"We are always reluctant to take legal action to enforce a contract, so we are disappointed that the Company has had to resort to this measure to force Mr Smith to complete his part of the commercial transaction that he agreed and signed off in June last year. The Company has paid Mr Smith a fair and reasonable price for his controlling interest in Fly540 Kenya and we expect to receive in full what we have paid for."
Source [fastjet]

No press release or statement from Don Smith himself has been received as of this posting.

As an addendum to this post, and to give some perspective on the whole matter, an article published in British paper, The Daily Telegraph, earlier this week laid out the complex and at times, vituperative, relationship between Don Smith and David Lenigas regarding the sale of Fly540.

Shortly after the deal was supposedly concluded in June 2012, things went south. An excerpt:
Mr Smith alleged two main things. First that he had not been paid. And, second, that Mr Lenigas reneged on a deal to clear almost $7m of inter-company debts at Kenya’s Chase bank. The loans had been guaranteed by Five Forty Aviation, including $2.1m by Mr Smith personally.

Last July, Mr Smith wrote to Mr Lenigas, saying: “I have not received my shares in Rubicon. The deal was always based on Lonhro/Rubicon clearing the bank debt … You have not paid the $2.1m you pledged to pay Chase. No proposal has been made to Chase on repayment of the rest of the debt. Mate, I am not being difficult but [as] far as I’m concerned the deal is still not done yet.”

Mr Lenigas emailed fellow directors later that month, saying “I don’t fully understand the Don/Chase situation”. But Mr Smith reminded him of a letter Mr Lenigas himself had signed in May. It had been sent to Chase bank on a Rubicon letterhead and stated: “We confirm that immediately upon the completion of the acquisition of the company [Five Forty Aviation] by ourselves we will pay, in settlement of those obligations due to Mr Smith and/or his associated companies… being $2.1m”. When Mr Smith raised that, Mr Lenigas emailed back: “If that letter comes out, I will have to resign immediately.”

Asked what he had meant, Mr Lenigas maintains it was just his way of bringing Mr Smith to the table, adding: “I was playing a game with him.”
Read the whole, very interesting article here.

Despite the negative publicity surrounding fastjet's war with Don Smith, the carrier's business has not been affected with its performance for February up 14% on January, with 81% load factors recorded.